Wednesday, January 13, 2010

CEB Should Have Produced All Our Electricity

We're a country with a small land mass. CEB used to be the only electricity producer when one private concern under the first Navin Ramgoolam government was allowed to join that market. And then Federation II took power and that strategic institution was declared broke to allow more abusive and confidential contracts to be signed in the back of the citizens of this country.

And then in November 2007 Ramgoolam went through his tarzan-like-chess-thumping routine to say that this couldn't go on and that he'd change his name if he would allow the good people of Mauritius to be subjected to this kind of rip-off. Even Berenger said that the rates of return of the IPP were too high and he suggested a 10% rate to maintain a facade of credibility after sitting on his hands when he was Prime Minister.

I am not too sure 10% is the right number. The discipline of establishing a fair rate of return in these particular cases is well established and can be used to determine the amount of money that has to be returned to the people of Mauritius through the CEB. What I am sure of though is that

Contracts involving billions of rupees of public funds cannot be confidential and more importantly they cannot be abusive.

CEB should again take the lead because Mauritius is awash with cash.

This matter could have been resolved very quickly. Going forward, it can be resolved in a week.

Abusive energy prices have along with the other blunders of Sithanen made Mauritius a more vulnerable and less competitive country.

10 comments:

Kozémotandé
said...

It is amazing how Mauritius could remain a la merci des barons sucrier years after the sugar industry has been phased out. The State ows us an explanation. Just like an explanation is still wanting for the one-off abusive and sudden increase in electricity bills that were served one year ago to the good citizens of this country.

I am not too sure that the issue cannot be swiftly sorted out as you say. Being a law student having sat the contract law module, I can imagine how tough it is to reconsider substantial portions of the the contracts signed between the State and the IPPs, particularly when it concerns prices, hence profits.That is why I think Govt has appointed a reputed law firm to delve deep into the matter given that as a Party, The IPPs have relied on very smart lawyers to build a foolproof contract.However, I totally agree with your view that the terms of the above should be made transparent for every citizen to access!

We need to know if and which politicians are financed by the sugar industry. And what amounts are involved.

Ramgoolam could have taxed them as soon as he had returned to power in 2005. How many grams of intelligence did we need to find a solution then? But that's not what happened though: Sithanen/Boolell agreed to give Rs5 billion to the sugar industry to sack people.

And then a 'historic' agreement was negotiated by a team appointed by Ramgoolam. Two years has passed and nothing has happened.

I do not know not the full terms of these contracts.It is very likely that they contain clauses for automatic upward revision of prices should any new factor come into play. So, taxing them could have resulted into higher prices. Think Nita D.talked of something similar.

In the time of SSR the CEB had the monopoly for generation as well as distribution of electricty.At that time CEB was a model for the private sector.In the late 70's with the ever increasing momentum of the trade unions and coupled with political interference, the CEB turned out to be inefficient and gradually going into "Le rouge".During the industrialisation phase of our island with SAJ thing started to worsen.CEB bought three gas turbines units so as to meet demand because those who governed could not "prevoir".These units cost three times more to operate than IPP.These IPP are very efficient and they mean business whereas CEB is operating as a social welfare organisation.CEB will never be able to produce the whole demand because of politics.

This is no secret that if the IPP shut down their units, this country will be paralysed and this will be very nasty for the economy.

That's why the present debate could boomerang against the present regime. They are equally responsible for the misgivings of the CEB, the bad planning in the energy sector and the indecent riches amassed by a few.